Texas Education Construction: Managing Growth and Opportunity

 In this episode of the Construction Insiders Podcast, Jessica Busch talks with experts Von Gallagher and Steve Risser about how Texas’ rapid growth is impacting educational construction. They discuss the challenges -and opportunities - of building new K-12 schools and higher education facilities, the role of energy sector growth in rural districts, and the rise of trade schools and dual-credit programs. Learn how Texas’ economic landscape is shaping the future of education construction and workforce development.

Transcript

[00:00:00] Jessica Busch: On this episode of the Construction Insiders Podcast, we're going to sit down with two of our leading educational construction experts and talk about how today's economic landscape is impacting educational construction throughout the state of Texas. 

[00:00:13] Jessica Busch: All right. Thank you for joining us today. We are sitting down to have another talk about construction and education today. Let's start our Construction Insiders podcast by introducing Von Gallagher and Steve Risser, thank you both for joining me today. This will be a interesting conversation.

[00:00:33] Von Gallagher: Thanks for having us. Glad to be here. 

[00:00:35] Jessica Busch: Of course. I'm glad I could pull you out of a meeting. I know, again, I seem to be pulling our guests anytime I'm in town or around, I pull you guys out and make you come sit down with me. So I appreciate your time. For those of you listening that don't know Von or Steve they're from Gallagher, one of our most recent acquisitions at The Cumming Group.

[00:00:54] Jessica Busch: They focus on education and municipal projects throughout Texas. So today if you guys are up for it, I wanted to talk about education and how Texas as what the second most populated state in the country, how the growth of this state is impacting the educational sector and as it relates to construction.

[00:01:18] Jessica Busch: So if you guys are game, we can jump right into it. 

[00:01:21] Von Gallagher: Sounds great. 

[00:01:22] Jessica Busch: All right. So the first burning question before the first burning question, let's set the stage here. With economic growth and the patterns we're seeing in Texas, particularly in these kind of fast growing cities, what is driving the education sector expansion that we're seeing? And what are some of those specific factors? . 

[00:01:43] Von Gallagher: So we have more people moving to Texas. 

[00:01:46] Jessica Busch: Okay. 

[00:01:47] Von Gallagher: And the more people that move to Texas, then the more need for educational facilities that there are. So towns that were small towns as recent as five years ago are now booming with growth with houses that need more educational facilities. So that's one of the biggest parts of the growth in Texas and the boom with the educational facilities. 

[00:02:09] Steve Risser: Yeah. And I would say there's industry growth as well, creating more jobs, and so all of a sudden, in some of those big cities, they're having a decline in enrollment and going out to those outskirts of town that Von was saying, because industry is growing, jobs are growing, but then businesses are starting to grow outside of those bigger cities as well. You have -

[00:02:33] Jessica Busch: In the suburban markets? 

[00:02:35] Von Gallagher: As well as people since covid don't have to it's not the scenario where you live outside then drive to the city to work every day. We know people work from home part time. People were trying to get out of the heavily populated areas because of those things and just the growth of people coming to Texas is really the biggest driving factor.

[00:02:57] Steve Risser: And housing affordability, it's hard to afford a house in the inner city now, you have to go on the outskirts, you have to go 20 miles out for the first time homebuyers and younger parents to come in. 

[00:03:09] Jessica Busch: Has the, we hear a lot being from California, we hear on the news a lot about the different policies, right?

[00:03:17] Jessica Busch: And how maybe difficult California can be, how wonderful Texas can be, are these pro development policies and the resources that we hear about that are so prevalent in Texas, is that influencing construction trends in education or how is that kinda of impacting things? 

[00:03:38] Steve Risser: Absolutely, Texas is one of the most business friendly states in the country.

[00:03:44] Steve Risser: In fact, it has more than more fortune 500 companies than any other state. It has over 50, at least 53 fortune 500 companies. And so because of the, the tax incentives the more affordable housing, relatively speaking, I believe San Antonio is the third Most affordable housing market in the state.

[00:04:07] Steve Risser: So you have in addition, property taxes and relatively speaking, property, just property values are lower. So that incentivizes a lot of businesses to come. And so just. What we talked about earlier, when we have more businesses come, they have more jobs and then you have more growth. So families and your families and it's all interconnected.

[00:04:30] Steve Risser: And what we also are seeing is there is organic growth. So people are coming to Texas and they're staying in Texas, or if they leave, if they go off, say the younger kids, if they go off to college, they're coming back to Texas and starting their careers instead of going off in other areas.

[00:04:48] Steve Risser: Yes, ma'am. 

[00:04:49] Von Gallagher: And those things are driving headquarters to move as well, right? So when they move here, there's a area north of Dallas that had several headquarters move in and there's stories where an entire street of new houses would be just moved in by the executives of that company. And they just like basically moved from California to Texas together.

[00:05:09] Von Gallagher: So that's taken place as well. 

[00:05:11] Jessica Busch: Interesting. I guess there's the space to do it, right? 

[00:05:14] Steve Risser: And that's the other driver. Is the land availability there is what it's been said that 20 percent of the population or I'm sorry, 80 percent of the population is in 20 percent of the land of Texas.

[00:05:26] Steve Risser: So we've got a whole 80 percent more of land that people don't live in. So there is expand ability for sure. 

[00:05:34] Jessica Busch: So this growth and you're talking about kind of executives just dropping in next to each other as their headquarters are moving in. How is that growth with K-12 educations? Let's talk about them specifically.

[00:05:45] Jessica Busch: How are those distributed across Texas and are there any unique challenges or opportunities for these construction projects we see popping up? We're talking smaller school districts, different counties. Where are we? What is that looking like right now? 

[00:05:59] Von Gallagher: So it's throughout the state we've got the growth in the metro areas it'll be driven by semiconductor plants going in, we've got a big area that's doing that.

[00:06:09] Von Gallagher: We've also got a vast amount of growth in west, more of the more desolate areas. And they're by the energy growth, wind power, solar power, those things that are fueling the economy for those to grow as well. The challenges that it creates is there's such a vast amount of construction in the state of Texas, then the battle for resources.

[00:06:31] Von Gallagher: Labor, those things is driving the cost and making projects take longer to construct. So we're having to adjust those things heavily to meet those deadlines. 

[00:06:45] Steve Risser: We're also seeing a shortage in. Design firms that there's shortage of personnel and engineering. Everybody's short, shorthanded because of the demand.

[00:06:55] Steve Risser: And so it's taken longer for buildings to get designed too. 

[00:06:59] Von Gallagher: Absolutely. 

[00:07:01] Jessica Busch: And so you mentioned some more of the, these areas that are getting out there a little bit from the cities that we're used to hearing about is there an impact to these smaller school districts? What are we seeing in terms of are they able to get the money get the bonds passed to develop these schools if they're all of a sudden becoming more popular?

[00:07:22] Jessica Busch: How is that landscaping? What is that looking like? 

[00:07:24] Steve Risser: The great thing about Texas as, The economy relates to the K-12 education is they're able to capitalize on property values to build buildings. And so because of what Von was speaking to with wind, solar, oil, gas, crypto mines data centers that are in rural communities, those create taxable dollars. And so they actually are able to build facilities that they would otherwise never have a chance of building. So you have rural districts. We're working with one district that's got 790 students total, K through 12 in the middle of West Texas, in the middle of nowhere. And we rebuilt an entire high school for them.

[00:08:11] Steve Risser: And we just did a field house and new stadium and all kinds of things as a result of the property values of the wind farm. So we help the districts capitalize on what their taxable values are so that they can build the buildings for the kids. 

[00:08:27] Jessica Busch: So something that just wouldn't be possible before.

[00:08:30] Steve Risser: The wind farm wouldn't be there. There's no way they would be able to benefit from it. There's no way that they could build the school because of it. Same way with solar farm. 

[00:08:38] Von Gallagher: The needs have been there for years and years, but the funds weren't available. So when the energy source shows up and the property values go up and now they can address those issues that they should have done 20, plus years ago.

[00:08:51] Steve Risser: Yeah, or even more that particular high school. I think it was like in the 1910s. It was crazy. So that is because of the business friendly environment that Texas provides. It provides opportunities for kids that they would not have. 

[00:09:10] Von Gallagher: It's very rewarding to be able to help them develop those opportunities, and to be able to do those things for those communities, and to affect future generations with those things.

[00:09:21] Von Gallagher: So it's. 

[00:09:22] Jessica Busch: And it's a correlation that many people outside of what you guys do wouldn't think of first as a benefit of a large headquarters moving in or another power source moving in of what it's actually do for the children, for the community. It's just. Really interesting. 

[00:09:40] Steve Risser: It's that's what one of the exciting things about the Cumming Group acquisition is because of the sectors that they serve, semiconductor, as Von said, health care data centers, manufacturing, hospitality, all of those are impacted by each other.

[00:09:58] Steve Risser: So let's say, for example. If the Cumming Group is working on a data center that data center creates taxable value for the K-12 school district. And then we're able to create a lot of times we're building career technology centers. 

[00:10:14] Jessica Busch: And I was going to, I was going to ask you about higher education.

[00:10:17] Steve Risser: And then now that's also associated potentially with healthcare. And as we have more growth and more population growth, and you have more workforce work like oil, fuel and energy, you need healthcare. So it's all cyclical and it's exciting to be able to be a part of that potentially.

[00:10:40] Jessica Busch: And I know this was off camera before we started, if I got you guys to sit down, but we had talked about you have the K-12, right? But with all these new facilities and the movement of people and these trade schools, higher education, everyone's also feeling the need. We've been hearing in, the education sector news about dual credit programs.

[00:11:07] Jessica Busch: How is it impacting specialized facilities? Are you seeing that in Texas? Is that, has that hit your area yet? What are you guys seeing in that world? 

[00:11:16] Von Gallagher: Definitely. The districts are trying to adjust to the workplace. They're trying to adjust that everyone. Isn't designed to go to a four year school?

[00:11:26] Von Gallagher: The opportunities with trade schools and specialized fields are abundant. Again, back to the semiconductor, we've got a junior college or a community college area that we're working with right now. That's solely based on that taxable value that then they're helping with the workforce to fuel that facility.

[00:11:44] Von Gallagher: We're seeing that a lot and that's fueling a lot of the new facilities that we're building for the community college areas. 

[00:11:52] Steve Risser: And there's a shortage of those skilled laborers, welders, electricians, HVAC. License, you know, we're trying to help promote those careers. And like Von said, that's not always a college degree, but it's a certification.

[00:12:09] Steve Risser: And so we do work hand in hand with university or school districts work hand in hand with university systems and local community colleges to be able to provide that certification through even the high school program and the dual credit program. 

[00:12:22] Jessica Busch: And so those Dual credit, kind of dual certification.

[00:12:26] Jessica Busch: And so you're working on facilities right now. 

[00:12:30] Steve Risser: Absolutely. 

[00:12:30] Jessica Busch: That is helping to facilitate that. 

[00:12:33] Steve Risser: Absolutely. We just completed a welding academy. For a small rural district in West Texas that was designed and built around a certification program from a manufacturer in a neighboring city. And so those high school graduates can get, they can get a dual credit, college, credit, but at the same time they can come out of there certified and guaranteed a job after having gone through that.

[00:13:00] Steve Risser: So that there are two things, the dual credit does help them. Obviously it helps the students minimize their potential college career. If you get my daughter's happens to be one of those where she's got enough dual credit to be a sophomore, she's still going to go four or five years.

[00:13:19] Jessica Busch: Unfortunately for you, right? 

[00:13:20] Steve Risser: That's right. That's not going to affect that, but it does help a lot of students, shrink or shorten their college career. It, and it puts them, it does put them ahead of ahead of academically. It puts them, ahead of where their other peers are.

[00:13:35] Von Gallagher: And it's really part of it's self serving. We need the electricians. We need the plumbers. We need the trades people. We're desperately in need of them. So the more that can be trained up in the facilities, we build in the more facilities we can build with them because without them, we're nothing.

[00:13:50] Jessica Busch: And so these trends you're talking about, are you seeing them and what are they generally if we're talking, what you'd call traditional blue collar institutions, the two, the four year colleges trade schools, like you've mentioned, are there specifics that you're seeing or is it all kind of heading in the same direction in terms of the facilities and overlap?

[00:14:07] Von Gallagher: I think the districts are doing a great job of it being an abundance. A lot of districts have CTE facilities, career and technology, but we're seeing more specialized. We just built a big facility for the Forney school district would do a lot of work for, and they've got a floral design program.

[00:14:24] Von Gallagher: They've got auto mechanic shop. They've got all these entrepreneurial trades That come through that facility. So when those kids get out of school, they already have a trade, but more than that, they have a skill from an entrepreneurial level to start their own business or to know how to deal with customers or how to evolve quicker in the business world.

[00:14:42] Von Gallagher: so 

[00:14:44] Jessica Busch: They're learning. 

[00:14:46] Steve Risser: They really are employees of the businesses. It's the facility is talking about is it's somewhat like a mall and a convention center. And so these students are part of it, right? 

[00:14:57] Von Gallagher: There will be an actual automotive shop in the facility that actually works on people's cars. That's owned by a business owner and that business owner. 

[00:15:05] Jessica Busch: So real life me could drive my car in? 

[00:15:07] Von Gallagher: When I go to a meeting there. I usually get my oil changed. And then by those students that work there are paid employees and they work there and it's a self sustaining business. 

[00:15:17] Jessica Busch: While getting school credit.

[00:15:18] Von Gallagher: Yes, absolutely. And they have coffee shops and restaurants and all types of things. 

[00:15:24] Steve Risser: Daycare. 

[00:15:24] Von Gallagher: And then this facility is filled with people who come there for those other events. So it's this self sustaining facility that they get hands on credits. It's phenomenal. 

[00:15:36] Jessica Busch: So that seems like a major shift when we're talking about facilities and development in the educational sector. 

[00:15:42] Von Gallagher: Just that and a great one, in my opinion, it's something that we desperately need.

[00:15:49] Jessica Busch: So changing directions a little bit, student housing athletic facilities, another kind of headline that we continue to see pop up in this, when we're talking about this sector how is that impacting the higher education side of things with construction? And is it, we hear a lot about in Texas, but I'm assuming it's happening in other states as well. And just what are you seeing from that student housing, athletic side of things? 

[00:16:13] Steve Risser: There is a shortage of student housing because of the population growth. And in Texas, there's a lot of great universities. As well, other in the surrounding states. And we've seen it not just in Texas but in the SEC for sure. Cause it, the SEC is growing. And so there are housing shortages in most of the higher ed UT, Texas university systems. As far as specializing, what we have recognized, too, is the need for specialized designers and constructors to do those residence halls. They're not just your typical dorm anymore.

[00:16:50] Steve Risser: There are now there's themes, there's experiences. And so we've realized that there are certainly different experiences with them that, haven't been what they have been in the past. 

[00:17:00] Jessica Busch: They're trying to stay competitive.

[00:17:02] Steve Risser: Yes, exactly. 

[00:17:03] Von Gallagher: Totally competitive with all these other options we're discussing. It's even more competitive to get those students to come to their campus. So they're trying to be more, if their dorms are better than others, then it may make a decision. 

[00:17:15] Jessica Busch: 18 years old, making a decision. The cooler dorm.

[00:17:19] Steve Risser: Absolutely. It's a selling point. May or may not run out sometimes. For sure. You bet. 

[00:17:23] Jessica Busch: And is that the same at play with athletic facilities? What are you seeing major trend wise there? Any big shifts? 

[00:17:29] Steve Risser: Absolutely. It's the experience that they have, the livability, the conveniences that those athletic residential facilities offer. Those are all coming into play because they're the same way. They're competing for the same athletes as well. 

[00:17:44] Von Gallagher: And because it is ramped up in the K-12 world so much with the level of facilities, indoor facilities, the stadiums.

[00:17:55] Von Gallagher: The universities have to be competitive just so that a kid that's a, that they want to recruit there to be a lot of times they'll go to, a D2 college and they're like, my high school was better than this. So it's really evolved. Everything as the NIL deals and everything else involved with that.

[00:18:10] Jessica Busch: Yeah that makes sense. And the state systems and requirements for smaller schools, have you seen anything play out with their projects or renovations regarding their facilities to try to, how are they doing it to be remaining competitive? 

[00:18:28] Steve Risser: I wouldn't say necessarily the state requirements, but the federal government gives the Texas.

[00:18:34] Steve Risser: Higher education system, like last year, they gave them over $650 million for research. So it's not so much the residential type of things, but it's the funding there, they're allowed to use for research. So we are seeing an increase in research type facilities in the higher ed that goes along with the career readiness, for example, with the Texas state technical college, they're doing a massive welding and technical academy that's helping and that all stems from research as well.

[00:19:08] Steve Risser: It's not a necessary requirement is the funding that they're able to get to use for those things. 

[00:19:14] Jessica Busch: And that was I was going to ask another question about that partnership between these schools and different organizations. How do you see that playing out? Is it just the new wave of construction or 

[00:19:27] Steve Risser: We're working with a community college now that partners with the local hospital and they're getting their certified nursing program.

[00:19:38] Steve Risser: Assistant CNA certification through them so that they can automatically go and work for that hospital. And so we're currently the construction manager for the health sciences building that's allowing them to get their certification and then ultimately go to work for them. So there is definitely collaboration between the companies and entities and the community colleges are offering that makes sense. It's if they're able what the community and actually the high school we're building, we built the high school that has graduate students that go to the community college to get certified, to go into that same healthcare in the same county.

[00:20:22] Steve Risser: Which happens to be in the same county as the semiconductor. So we are truly living that experience of being able to see a pre K get a career in the same county. And we're able to be a part of that from the very beginning to the end, no kidding, 

[00:20:41] Von Gallagher: It all stems back to what we talked about earlier.

[00:20:45] Von Gallagher: Everyone's more competitive for the workforce that's not there, so the sooner you can get them engaged, then the sooner they can be available and the sooner that they're not in another industry when we all need the same people. 

[00:20:58] Jessica Busch: Yeah, 

[00:20:58] Von Gallagher: it's really cool. 

[00:20:59] Steve Risser: It is. 

[00:21:01] Jessica Busch: That's something that you could easily see starting to be replicated.

[00:21:05] Jessica Busch: Throughout Texas and definitely other states because the need is there to have a case study where you guys have done it from the pre k to their, higher education. 

[00:21:14] Von Gallagher: I think what we're seeing is it's more geared towards the needs of the geographic area. I think that's something that we haven't seen for years. Dual credit's been around you could get your college credit, you get your, welding degree, different things. But now you'll see where the medical facility needs those needs.

[00:21:32] Von Gallagher: So they specifically focus on that. So they're tied to the local high school and the community colleges, Steve saying to do those things. So it's more targeted, the welding program you mentioned, that's a direct 

[00:21:44] Jessica Busch: need of the local community, 

[00:21:45] Von Gallagher: direct, 

[00:21:47] Jessica Busch: and 

[00:21:48] Steve Risser: there's also. With this same community college, we're doing a police academy for it as part of their educational program.

[00:21:56] Steve Risser: So then that ties into the municipal work. So it really is it's fun and exciting to see, how it can evolve and how we can actually be a part of all of that. 

[00:22:09] Jessica Busch: So before I let you guys go, if you were to generalize lessons learned. Looking at the innovations, looking at the new wave of this educational construction.

[00:22:22] Jessica Busch: What do. Other counties, other parts of the state, and frankly, probably other states start really paying attention to if they're not already. 

[00:22:33] Von Gallagher: I think the earlier you can get students involved the better for everyone, even if they identify it as, Hey, I want to be in welding, but they.

[00:22:43] Von Gallagher: Decide they don't want to do that. Then it helps their career path sooner to take the direction of what it will be. Maybe they're not sure what it is, but they've eliminated things along the way. I think they should don't hesitate to reach out there and try those programs because it's going to help a kid find their way one way or another, which is going to help our entire community as a whole as we move along.

[00:23:05] Von Gallagher: So be innovative. 

[00:23:09] Steve Risser: I think. One of the most important things that we've learned over the years is understanding how the, whether it be a school, a higher education, a health care, any kind of community of public entity and private for that matter, is how the funding works is understand holistically the entire year.

[00:23:32] Steve Risser: Program because everybody wants to build a new building. Everybody knows that they want to do cool things. They know they have to compete, but as a partner, and that's how we view ourselves as the partner with our clients is we need to also understand how they're going to best utilize their money and what phases, okay, this is the end goal.

[00:23:52] Steve Risser: How do we get there? And can we get it? Can we do it, get all the money at one time? Are we able to get it that way or do we have to do it in phases? And that's part of all of our master planning. So having the vision like Von was saying, and also understanding how it's going to work financially allows us to help them more than they really understand that we can help them.

[00:24:13] Jessica Busch: So if it's a bond, how are we going to get there? The preparation that needs to go into that, the community backing that needs to go into that, all of those come way before 

[00:24:22] Steve Risser: it starts. Yes. Rather than just, Hey, they're getting ready to do something. We need to be a part of it. It's. Let's help them develop the plan.

[00:24:32] Jessica Busch: And we can have a whole nother podcast segment on that. Cause I know you and I talked about that extensively and how in the weeds you guys get with that to make sure it is successful from the very beginning before all these bright and shiny buildings show up. Awesome. 

[00:24:46] Jessica Busch: Thank you. Thank you. I will let you get back to where you are needed. But until then We'll call it a day. so much. Thank you guys. 

[00:24:54] Von Gallagher: Thank you.